Definition of Months of Supply:

Months of Home Supply Orange County:

This number tells a BanCorp REALTOR® how many months it would take for all the current homes for sale in a given community in Orange County to sell, given a monthly sales volume. 3 1/2 to 5 1/2 months of supply is about average in South Orange County: if the number is smaller, this means that buyers are likely controlling the real estate market and there are much fewer home sellers. The higher the number, this means there are more sellers than buyers. You can calculate the months of supply by dividing the total number of homes for sale over the number of homes sold in one month.

Here is a good working example: Let's say you did a search in Irvine and notice that there were 1,300 homes for sale in November, 2013, but only 300 actually sold, this means that there are 3 months of supply left in the market if only 400 homes sold for each month and no more homes came on the market. This is a hot market where homes are selling very fast.